Washington, D.C. — The White House has reinvented its language on affirmative action and re-written the rules on preference programs. The move will further institutionalize discrimination in federal contracting and cost the taxpayer millions of dollars. The President’s new program is deceptive and unconstitutional but there’s not much Congress can do about it.

To qualify for a preference in a contract bidding war, a company must qualify as a small disadvantaged business (SDB), meeting both an economic threshold and socially disadvantaged requirement. Under the old guidelines, social disadvantage was presumed for almost every minority group conceivable. The new guidelines continue that presumption, but relax the standard from the current “clear and convincing” to a weaker “preponderance of the evidence.” The Administration thus ensures that more firms will sign up for SDB status. This expands the constituency for the preference programs and thereby secures their future. But lowering the bar is just the beginning.

The centerpiece of this President’s resuscitation of affirmative action is called the “price evaluation adjustment program.” This means that if a firm can get itself certified as a SDB, that firm’s bid on a federal contract could qualify for a “price evaluation credit” of 10 percent. Translation: ten percent wiggle room on federal contracts for anyone of the appropriate skin color.

But didn’t the U.S. Supreme Court’s Adarand Constructors, Inc. v. Pena decision rule that federal preferences in contracting were constitutionally suspect and should be subject to strict scrutiny?

The two standards outlined in the Adarand decision require that the state demonstrate a “compelling interest” in pursuing its action and that the program be “narrowly tailored” in its impact. The Administration explains that giving preferences to SDBs meets the compelling interest requirement because the government is obligated to fight discrimination. Of course, their solution would discriminate against one group for the advantage of another, as any preference program necessarily does. That doesn’t bother the White House, though, because they are really only interested in the rights of particular groups, not promoting true equality through equal treatment.

To meet the “narrowly tailored” standard, the White House and the Department of Justice pulled out all the stops. They claim that their new program meets the narrowly tailored requirement with the creation of a “benchmarking system.” This new system is just a new face on the old proportional representation argument. The Department of Commerce identifies which sectors require special assistance for SDBs by comparing their actual share of federal contracts with what would be expected in the absence of discrimination. These disparity studies are designed to infer discrimination from any difference between representation in a pool of candidates and their representation among the chosen group.

Unfortunately, what makes statistics so tempting is the very thing that undermines their credibility – they are too easily manipulated by those holding the calculator. There’s no way to account for the variables of individual situations. Indeed, if contracts are awarded to the lowest qualified bid, discrimination has no way to enter the picture. But the White House is immune to these arguments.

Using these new standards, the Commerce Department has labeled industries awarded roughly 74 percent of federal contracts dollars – a truly staggering sum – as guilty of discrimination, thereby making these industries eligible for the new 10-percent bid shelter. The irony here is that the White House remedy for meeting the strict scrutiny requirement has expanded the reach of preferential bidding by requiring all federal agencies to offer the bid shelters. Until now only the Department of Defense, NASA, and the Coast Guard could offer bid “credits.” This expansion means millions of taxpayers’ dollars going to inflated contracts.

This new program, created through executive authority, expands the reach of preferential programs that discriminate against people on the basis of race and does so in the name of “mending” the old system. They didn’t just mend – they sanded, buffed, and poured a new foundation and this time the house is going to be a lot harder to blow down.

— Katherine Post

Director of the Center for Enterprise and Opportunity